SuperTalk Mississippi

AG Hood launches lawsuit against student loan lenders

Photo courtesy of Jim Hoods office

Attorney General Jim Hood and the Mississippi Center for Justice are fighting in court for thousands of Mississippians who were financially affected by deceptive student loan lender Navient Corporation from 2000 to present.

The pair filed a lawsuit last week against Navient Corporation, Navient Solutions, LLC and Sallie Mae Bank alleging widespread abuses across all aspects of its student loan business, including misleading borrowers about payment options that resulted in higher monthly payments that many could not afford.

The complaint, which was filed in Hinds County Chancery Court, asks the court to order Navient to stop its unfair and deceptive practices targeting Mississippi students, reform its loan servicing practices, give up unlawfully gained profits and provide damages to the state.

Specifically, General Hood believes the company pushed risky and expensive subprime loans, which were designed to fail, to student loan borrowers, specifically targeting low-income borrowers. The complaint alleges Navient charged excessively high interest rates and fees, despite evidence that these loans would likely default at extraordinarily high rates, potentially destroying the livelihoods and futures of many student loan borrowers.

“Navient’s conduct is estimated to have added $4 billion to the national student loan debt,” said General Hood. “Students are the future of our state, and the presence of companies in Mississippi that knowingly take advantage of students who need the money to continue their education will not be allowed under my watch.”

The complaint also alleges that when borrowers contacted Navient because they could not make their monthly federal student loan payments, Navient disregarded the many available borrower-friendly income based repayment plans and instead, steered borrowers into successive and costly forbearance periods, neglecting to provide information necessary to receive or maintain enrollment in these income-based plans. This conduct is alleged to have harmed thousands of Mississippi student loan borrowers, in violation of the Mississippi Consumer Protection Act, as well as millions of student loan borrowers across the country.

“Sixty percent of Mississippi student loan borrowers are in debt due to student loans, and this debt is crippling to those who are trying to be financially independent,” said Mississippi Center for Justice Consumer Protection Director Charles O. Lee.

He added that having their loan servicer increase the difficulty of repayment is unconscionable.

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